UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                                    FORM 10-Q

(Mark One)
[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         For the quarterly period ended SEPTEMBER 30, 2002

                                       OR


[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934
         For the transition period from _______________ to _______________

         Commission file number 1-4169


                       TEXAS GAS TRANSMISSION CORPORATION
             (Exact name of registrant as specified in its charter)

                    DELAWARE                    61-0405152
         (State or other jurisdiction of     (I.R.S. Employer
         incorporation or organization)     Identification No.)


    3800 FREDERICA STREET, OWENSBORO, KENTUCKY                 42301
          (Address of principal executive offices)           (Zip Code)

    Registrant's telephone number, including area code: (270) 926-8686
                                                        --------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No_

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest  practicable date. 1,000 SHARES AS OF OCTOBER 31,
2002

REGISTRANT  MEETS THE CONDITIONS SET FORTH IN GENERAL  INSTRUCTIONS  H(1)(A) AND
(B) OF FORM 10-Q AND IS THEREFORE  FILING THIS FORM WITH THE REDUCED  DISCLOSURE
FORMAT.



<PAGE>


                       TEXAS GAS TRANSMISSION CORPORATION
                                      INDEX



                                                                           PAGE

PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements

          Consolidated Statements of Income ...........................      3

          Consolidated Balance Sheets - Assets  ..........................   4

          Consolidated Balance Sheets - Liabilities and Stockholder's Equity 5

          Consolidated Statements of Cash Flows   .....................      6

          Condensed Notes to Financial Statements ......................     7

 Item 2.  Management's Narrative Analysis of the Results of Operations ..   14

 Item 4. Controls and Procedures  ...................................       18


PART II.  OTHER INFORMATION

Item 1. Legal Proceedings ............................................      19

Item 6.   Exhibits and Reports on Form 8-K    ...........................   19








Certain  matters  discussed in this report,  excluding  historical  information,
include forward-looking statements.  Although Texas Gas Transmission Corporation
believes such forward-looking statements are based on reasonable assumptions, no
assurance can be given that every  objective will be achieved.  Such  statements
are made in reliance on the "safe harbor" protections provided under the Private
Securities  Reform Act of 1995.  Additional  information about issues that could
lead to material  changes in performance is contained in Texas Gas  Transmission
Corporation's  2001 Annual Report on Form 10-K and 2002 First and Second Quarter
Reports on Form 10-Q.


<PAGE>



                         PART I - FINANCIAL INFORMATION


ITEM 1.      FINANCIAL STATEMENTS

                       TEXAS GAS TRANSMISSION CORPORATION

                        CONSOLIDATED STATEMENTS OF INCOME
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                                   THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                       SEPTEMBER 30,                      SEPTEMBER 30,
                                                ------------------------------     ------------------------------
                                                     2002                2001           2002            2001
                                                -------------       -------------  -------------   -------------
<S>                                              <C>            <C>                <C>             <C>

Operating Revenues:
    Gas transportation                           $    57,102    $    41,086        $   185,844     $   171,621
    Gas storage                                          513            590              1,781           1,762
    Other                                                882          1,077              2,904           3,780
                                                 -----------    -----------        -----------     -----------
      Total operating revenues                        58,497         42,753            190,529         177,163
                                                 -----------    -----------        -----------     -----------

Operating Costs and Expenses:
    Cost of gas transportation                         1,173          1,011              3,512           3,405
    Operation and maintenance                         13,140         11,788             34,102          35,354
    Administrative and general                        12,516         12,901             37,222          36,200
    Depreciation and amortization                      4,430         11,505             27,386          34,342
    Taxes other than income taxes                      3,847          3,593             12,146          10,990
                                                 -----------    -----------        -----------     -----------
      Total operating costs and expenses              35,106         40,798            114,368         120,291
                                                 -----------    -----------        -----------     -----------

Operating Income                                      23,391          1,955             76,161          56,872
                                                 -----------    -----------        -----------     -----------

Other (Income) Deductions:
    Interest expense                                   5,046          5,476             15,542          16,159
    Interest income from affiliates                     (527)          (786)            (1,074)         (3,003)
    Gain on sale of equipment                           (444)        -                  (1,767)         -
    Miscellaneous other income, net                     (509)          (303)            (1,545)            (67)
                                                 -----------    -----------        -----------     -----------
      Total other deductions                           3,566          4,387             11,156          13,089
                                                 -----------    -----------        -----------     -----------

Income (Loss) Before Income Taxes                     19,825         (2,432)            65,005          43,783

Provision (Benefit) for Income Taxes                   7,690           (604)            25,682          17,811
                                                 -----------    -----------        -----------     -----------

Net Income (Loss)                                $    12,135    $    (1,828)       $    39,323     $    25,972
                                                 ===========    ============       ===========     ===========


</TABLE>




         The  accompanying  condensed  notes  are  an  integral  part  of  these
                       consolidated financial statements.
<PAGE>

                       TEXAS GAS TRANSMISSION CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                SEPTEMBER 30,             DECEMBER 31,
                       ASSETS                                          2002                     2001
                                                               --------------------      -------------------
<S>                                                            <C>                        <C>

Current Assets:
    Cash and cash equivalents                                  $          109             $            86
    Receivables:
       Accounts receivable - TGT Enterprises, Inc.                     -                            7,003
       Trade                                                           12,079                           4
       Other affiliates                                                 3,059                         278
       Other                                                            3,701                       1,466
    Gas Receivables:
       Transportation and exchange                                      1,567                       1,627
       Storage                                                          1,629                      -
    Advances to affiliates                                             22,310                      66,299
    Inventories                                                        14,334                      13,950
    Deferred income taxes                                              11,274                      20,492
    Costs recoverable from customers                                   12,679                      17,261
    Gas stored underground                                              3,922                       3,486
    Prepaid and other expenses                                          3,103                       1,551
                                                               --------------             ---------------
       Total current assets                                            89,766                     133,503
                                                               --------------             ---------------

Property, Plant and Equipment, at cost:
    Natural gas transmission plant                                  1,111,889                   1,096,620
    Other natural gas plant                                           166,050                     167,137
                                                               --------------             ---------------
                                                                    1,277,939                   1,263,757
    Less -- Accumulated depreciation and amortization                 204,372                     202,479
                                                               --------------             ---------------
       Property, plant and equipment, net                           1,073,567                   1,061,278
                                                               --------------             ---------------

Other Assets:
    Gas stored underground                                            120,692                     118,883
    Costs recoverable from customers                                   36,594                      37,641
    Prepaid pension                                                    33,175                      35,612
    Other                                                               8,817                       9,602
                                                               --------------             ---------------
       Total other assets                                             199,278                     201,738
                                                               --------------             ---------------

       Total Assets                                            $    1,362,611             $     1,396,519
                                                               ==============             ===============





</TABLE>




                   The  accompanying  condensed  notes are an  integral  part of
                    these consolidated financial statements.


<PAGE>



                       TEXAS GAS TRANSMISSION CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                             (THOUSANDS OF DOLLARS,
                             EXCEPT FOR SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                   SEPTEMBER 30,           DECEMBER 31,
LIABILITIES AND STOCKHOLDER'S EQUITY                                      2002                   2001
                                                                 ---------------------    ------------------

                                                            <c>                        <c>
Current Liabilities:
    Payables:
       Trade                                                   $        2,129             $         5,685
       Affiliates                                                       5,654                      32,822
       Other                                                            7,147                      10,139
    Gas Payables:
       Transportation and exchange                                      1,618                       3,618
       Storage                                                         31,681                      27,824
    Accrued income taxes due affiliate                                -                            18,915
    Accrued taxes other                                                16,504                      11,708
    Accrued interest                                                    7,979                       6,557
    Accrued payroll and employee benefits                              32,208                      34,732
    Other accrued liabilities                                          11,242                       9,105
    Reserve for regulatory and rate matters                           -                            31,107
                                                               --------------             ---------------
       Total current liabilities                                      116,162                     192,212
                                                               --------------             ---------------

Long-Term Debt                                                        249,882                     250,174
                                                               --------------             ---------------

Other Liabilities and Deferred Credits:
    Deferred income taxes                                             201,986                     172,892
    Postretirement benefits other than pensions                        25,438                      30,101
    Pension plan costs                                                 33,175                      35,612
    Other                                                              21,065                      29,948
                                                               --------------             ---------------
       Total other liabilities and deferred credits                   281,664                     268,553
                                                               --------------             ---------------

Commitments and Contingencies (Note 3)

Stockholder's Equity:
    Common stock, $1.00 par value, 1,000 shares
       authorized, issued and outstanding                                   1                           1
    Premium on capital stock and other paid-in capital                630,608                     630,608
    Retained earnings                                                  84,294                      54,971
                                                               --------------             ---------------
       Total stockholder's equity                                     714,903                     685,580
                                                               --------------             ---------------

       Total Liabilities and Stockholder's Equity              $    1,362,611             $     1,396,519
                                                               ==============             ===============



</TABLE>



                   The  accompanying  condensed  notes are an  integral  part of
                    these consolidated financial statements.


<PAGE>



                       TEXAS GAS TRANSMISSION CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (THOUSANDS OF DOLLARS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                              NINE MONTHS ENDED SEPTEMBER 30,
                                                                                2002                     2001

                                                                           -------------           ---------------
<S>                                                                           <C>                   <C>

OPERATING ACTIVITIES:
    Net income                                                                $   39,323            $      25,972
    Adjustments to reconcile to cash (used in) provided from operations:
      Depreciation and amortization                                               27,386                   34,342
      Provision for deferred income taxes                                         40,269                    2,521
      Gain on sale of equipment                                                   (1,767)                     -
      Changes in operating assets and liabilities:
        Receivables                                                              (15,879)                   8,072
        Receivable - TGT Enterprises, Inc.                                         7,003                      -
        Inventories                                                                 (384)                   1,243
        Affiliates                                                               (29,575)                  (2,101)
        Other current assets                                                       1,042                   (5,250)
        Accrued income taxes due affiliate                                       (18,915)                 (14,226)
        Payables and accrued liabilities                                          (4,058)                  11,622
        Reserve for regulatory and rate matters                                  (31,107)                  17,152
        Other, including changes in noncurrent assets and liabilities            (15,258)                  (7,780)
                                                                              --------------          -------------
          Net cash (used in) provided by operating activities                     (1,920)                  71,567
                                                                              --------------          -------------

FINANCING ACTIVITIES:
           Dividends                                                             (10,000)                 (25,000)
                                                                              --------------          -------------
           Net cash used in financing activities                                 (10,000)                 (25,000)
                                                                              --------------          -------------
INVESTING ACTIVITIES:
    Property, plant and equipment:
      Capital expenditures, net of allowance for funds used
         during construction                                                     (36,864)                 (44,083)
      Proceeds from sales and salvage values,
         net of costs of removal                                                   4,818                     (462)
    Advances to affiliates, net                                                   43,989                   (2,283)
                                                                              --------------          -------------
           Net cash provided (used in) investing activities                       11,943                  (46,828)
                                                                              --------------          -------------

Increase (decrease) in cash and cash equivalents                                      23                     (261)
Cash and cash equivalents at beginning of period                                      86                      261
                                                                              --------------          -------------

Cash and cash equivalents at end of period                                    $      109             $      -
                                                                              ==============          =============

Supplemental  disclosures  of cash flow  information:
Cash paid during the year for:
       Interest (exclusive of amount capitalized)                             $   15,949             $     19,714
       Income taxes paid                                                      $      841             $      1,290
       Income taxes (refund)                                                  $        0             $          0
</TABLE>

                   The  accompanying  condensed  notes are an  integral  part of
                    these consolidated financial statements.


<PAGE>


                       TEXAS GAS TRANSMISSION CORPORATION
                     CONDENSED NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)


                       1. CORPORATE STRUCTURE AND CONTROL

       Texas  Gas  Transmission  Corporation  (Texas  Gas) is  wholly  owned  by
Williams Gas Pipeline Company,  LLC (WGP), which is a wholly owned subsidiary of
The Williams Companies, Inc. (Williams).

                            2. BASIS OF PRESENTATION

       The condensed financial  statements have been prepared from the books and
records of Texas Gas.  Certain  information  and footnote  disclosures  normally
included  in  financial   statements  prepared  in  accordance  with  accounting
principles  generally  accepted  in the United  States  have been  condensed  or
omitted. The condensed unaudited  consolidated  financial statements include all
adjustments both normal recurring and others which, in the opinion of Texas Gas'
management,  are necessary to present fairly its financial position at September
30,  2002,  and  results  of  operations  for the  three and nine  months  ended
September 30, 2002 and 2001, and cash flows for the nine months ended  September
30, 2002 and 2001. These condensed  consolidated  financial statements should be
read in conjunction  with the  consolidated  financial  statements and the notes
thereto  included in Texas Gas' 2001  Annual  Report on Form 10-K and 2002 First
and Second Quarter Reports on Form 10-Q.

       The  preparation of financial  statements in conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates and assumptions  that affect the amounts  reported in the consolidated
financial  statements and accompanying  notes.  Actual results could differ from
those estimates.  Estimates and assumption  which, in the opinion of management,
are significant to the underlying  amounts included in the financial  statements
and for which it would be reasonably  possible that future events or information
could  change  those  estimates  include:  1)  revenues  subject to  refund;  2)
litigation-related  contingencies; 3) environmental remediation obligations; and
4) impairment assessments of long-lived assets.

NEW ACCOUNTING PRONOUNCEMENTS

       In June 2001,  the  Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Standards SFAS No. 142,  "Goodwill and Other  Intangible
Assets."  Texas Gas  adopted  this  Statement  effective  January 1, 2002.  This
Statement  addresses  accounting and reporting  standards for goodwill and other
intangible  assets.  Under  the  provisions  of  this  Statement,  goodwill  and
intangible assets with indefinite useful lives are no longer amortized, but will
be tested  annually  for  impairment.  Because  Texas Gas has no  goodwill,  and
intangible  assets  are  amortized  at  rates  approved  by the  Federal  Energy
Regulatory  Commission  (FERC)  through  regulatory  proceedings,  there  was no
impairment upon adoption.

       In June  2001,  the  FASB  issued  SFAS No.  143,  Accounting  for  Asset
Retirement  Obligations,"  which is effective for fiscal years  beginning  after
June 15, 2002. The Statement  requires  legal  obligations  associated  with the
retirement of long-lived assets to be recognized at their fair value at the time
<PAGE>

that the obligations are incurred. Upon initial recognition of a liability, that
cost should be capitalized as part of the related long-lived asset and allocated
to expense  over the useful life of the asset.  Williams  and its  subsidiaries,
including Texas Gas, will adopt the new rules on asset retirement obligations on
January 1, 2003. The impact of adoption is to be reported as a cumulative effect
of change in accounting  principle.  Application of the new rules is expected to
result in  estimated  retirement  obligations  related to offshore  transmission
platforms.  The  estimated  obligations  will consider  current  factors such as
expected  future  inflation  rates,   current  costs  of  borrowing,   estimated
retirement dates and estimated expected costs of required retirement activities.
Retirement  obligations  have  not been  estimated  for  assets  for  which  the
remaining life is not currently  determinable,  including pipeline  transmission
assets and gas gathering systems.

       In second-quarter 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements  No. 4, 44 and 64,  Amendment of FASB Statement No. 13, and Technical
Corrections."  The  rescission of SFAS No. 4,  "Reporting  Gains and Losses from
Extinguishment  of  Debt,"  and SFAS No.  64,  "Extinguishments  of Debt Made to
Satisfy  Sinking-Fund   Requirements,"  requires  that  gains  and  losses  from
extinguishment  of debt only be classified as  extraordinary  items in the event
that they meet the criteria of APB Opinion No. 30. SFAS No. 44,  "Accounting for
Intangible Assets of Motor Carriers,"  established  accounting  requirements for
the effects of  transition  to the Motor  Carriers  Act of 1980 and is no longer
required now that the transitions have been completed.  Finally,  the amendments
to SFAS No. 13 require certain lease  modifications  that have economic  effects
which  are  similar  to   sale-leaseback   transactions   be  accounted  for  as
sale-leaseback  transactions.  The provisions of this  Statement  related to the
rescission of SFAS No. 4 are to be applied in fiscal years  beginning  after May
15,  2002,  while  the  provisions  related  to SFAS No.  13 are  effective  for
transactions occurring after May 15, 2002. All other provisions of the Statement
are effective for financial  statements  issued on or after May 15, 2002.  There
was no initial  impact of SFAS No. 145 on Texas Gas' results of  operations  and
financial position.  However, in subsequent reporting periods,  gains and losses
from debt  extinguishments  will continue to be accounted for in accordance with
FERC regulations.

       Also in  second-quarter  2002, the FASB issued SFAS No. 146,  "Accounting
for Costs Associated with Exit or Disposal Activities." This Statement addresses
financial  accounting and reporting for costs  associated  with exit or disposal
activities and nullifies  Emerging Issues Task Force Issue No. 94-3,  "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."  This Statement
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity  be  recognized  and  measured  initially  at fair  value only when the
liability is incurred. The provisions of the Statement are effective for exit or
disposal  activities  that are initiated  after December 31, 2002. The effect of
this standard on Texas Gas is being evaluated.

       Certain reclassifications have been made in the 2001 financial statements
to conform to the 2002 presentation.

       SEASONAL VARIATION

       Operating  income may vary by quarter.  Based on current rate  structure,
Texas Gas experiences  higher  operating income in the first and fourth quarters
as compared to the second and third quarters.

<PAGE>



                    3. CONTINGENT LIABILITIES AND COMMITMENTS

RATE AND REGULATORY MATTERS

       FERC ORDER 637

       On February 9, 2000,  the Federal  Energy  Regulatory  Commission  (FERC)
issued a final rule,  Order 637, in which FERC adopted certain  policies that it
finds are necessary to adjust its current  regulatory  model to the needs of the
evolving markets,  but determined that any fundamental changes to its regulatory
policy will be considered  after  further  study and  evaluation of the evolving
marketplace.  Order 637  revises  the  FERC's  pricing  policy  to waive,  for a
two-year period, the maximum price ceilings for short-term  releases of capacity
of less than one year,  and permits  pipelines  to file  proposals  to implement
seasonal rates for short-term services and term-differentiated rates, subject to
certain  requirements  including the  requirement  that a pipeline be limited to
recovering its annual revenue requirement under those rates. Texas Gas submitted
an Order 637  compliance  filing on August 15, 2000,  which  contained pro forma
tariff sheets designed to comply with certain  directives in the order regarding
the conduct of daily business  transactions.  A technical conference was held on
May 24, 2001, to initiate informal  discussions with all parties regarding Order
637 compliance  for Texas Gas. A contested  offer of settlement was filed on May
14, 2002 by Texas Gas. On August 27,  2002,  the FERC issued its "Order on Order
Nos. 637, 587-G,  and 587-L" which accepted many of the provisions of the May 14
settlement of required  modifications as specified in the body of the August 27,
2002  order.  Ordering  paragraph  A directed  Texas Gas to file  actual  tariff
sheets,  including  modifications,  within  thirty  days of the  issuance of the
order.  Ordering  paragraph  B states  that  Texas Gas may not place the  tariff
sheets into effect before further order of the FERC. Texas Gas made the required
compliance  filing on September  30, 2002.  Texas Gas and several  other parties
have requested rehearing and/or clarification of the August 27, 2002 order.

       GENERAL RATE CASE (DOCKET NO. RP00-260)

       On April  28,  2000,  Texas Gas filed a  general  rate case  (Docket  No.
RP00-260) which became effective November 1, 2000, subject to refund.  Texas Gas
proposed  in  this  rate  case  to  implement  value-based,  term-differentiated
seasonal rates for short-term  services effective November 1, 2000, as permitted
by FERC Order 637. On May 31,  2000,  the FERC issued its "Order  Accepting  and
Suspending Tariff Sheets Subject to Refund,  Rejecting Other Tariff Sheets,  and
Establishing Hearing and Settlement  Procedures" and established  administrative
procedures for the case. Although the case was set for hearing,  the hearing was
held in abeyance  pending the filing of  additional  information  related to the
value-based rate proposal for short-term firm transportation  service. Texas Gas
made that  supplemental  filing on June 30, 2000. On October 27, 2000,  the FERC
issued an order on that supplemental filing referring all issues in the case for
hearing. The participants engaged in informal settlement negotiations to attempt
to resolve all issues without a formal  hearing.  On August 14, 2001,  Texas Gas
submitted an offer of settlement  proposing to dispose of all issues outstanding
in  the  proceedings.  Only  one  group  of  participants  (Indicated  Shippers)
protested the settlement.  On September 26, 2001, the  Administrative  Law Judge
severed the Indicated  Shippers,  and  certified  the  settlement to the FERC as
uncontested  for the  remaining  parties.  On March 4, 2002,  the FERC issued an
order  approving the  settlement  and severing the  Indicated  Shippers from the
settlement  provisions.  On June 17, 2002,  the FERC issued an order denying the
Indicated  shipper's  request  for  rehearing  of the March 4, 2002  order.  The
<PAGE>

settlement  became  effective  31 days after that order when no party  filed any
further requests for rehearing.  Thus, the settlement's  prospective  rates went
into effect on August 1, 2002 and refunds of  approximately  $37.5  million were
made on  September  16,  2002.  Texas Gas had  provided an adequate  reserve for
amounts, including interest, which were refunded to customers.  Additionally, on
July 15,  2002,  Texas  Gas  filed an offer  of  settlement  with the  Indicated
Shippers to resolve all remaining  issues in the case.  The FERC issued an order
on October 10, 2002 approving the settlement. No additional refunds are due as a
result of the settlement  with the Indicated  Shippers.  In the third quarter of
2002, as a result of the settlement,  Texas Gas recorded  additional revenues of
$0.3  million  and reduced its  estimated  reserve for rate  refunds by an equal
amount.   Texas  Gas  also  recorded  $10.2  million  of  revenues  and  reduced
depreciation expense by $5.7 million to implement provisions of the settlement.

       NOTICE OF PROPOSED RULEMAKING (DOCKET NO. RM01-10-000)

       On September  27, 2001,  the FERC issued a Notice of Proposed  Rulemaking
(NOPR)  proposing  to  adopt  uniform  standards  of  conduct  for  transmission
providers.  The proposed  rules  define  transmission  providers  as  interstate
natural gas pipelines and public utilities that own, operate or control electric
transmission  facilities.  The proposed  standards would regulate the conduct of
transmission providers with their energy affiliates. The FERC proposes to define
energy affiliates  broadly to include any transmission  provider  affiliate that
engages in or is involved in  transmission  (gas or electric)  transactions,  or
manages or controls transmission capacity, or buys, sells, trades or administers
natural gas or electric energy or engages in financial  transactions relating to
the sale or transmission  of natural gas or electricity.  Current rules regulate
the  conduct of Texas Gas and its  natural gas  marketing  affiliates.  The FERC
invited  interested  parties to comment on the NOPR. On April 25, 2002, the FERC
issued  its staff  analysis  of the NOPR and the  comments  received.  The staff
analysis  proposes  redefining  the  definition of energy  affiliates to exclude
affiliated  transmission  providers.  On May 21,  2002,  the FERC  held a public
conference concerning the NOPR and the FERC invited the submission of additional
comments.  If adopted,  these new  standards  would  require the adoption of new
compliance measures by Texas Gas.

       NOTICE OF INQUIRY (DOCKET NO. PL02-6-000)

       On July 17, 2002, the FERC issued a Notice of Inquiry to seek comments on
its  negotiated  rate  policies  and  practices.  The  FERC  states  that  it is
undertaking a review of the recourse rate as a viable  alternative and safeguard
against the exercise of market power of interstate gas pipelines, as well as the
entire spectrum of issues related to its negotiated  rate program.  The FERC has
requested that interested  parties respond to various  questions  related to the
FERC's negotiated rate policies and practices.  Texas Gas has negotiated certain
rates under the FERC's  existing  negotiated rate program,  and  participated in
comments filed in this  proceeding by Williams in support of the FERC's existing
negotiated rate program.

       NOTICE OF PROPOSED RULEMAKING (DOCKET NO. RM02-14-000)

       On August 1, 2002, the FERC issued a NOPR that proposes  restrictions  on
the type of cash management  program employed by Williams and its  subsidiaries,
including Texas Gas. In addition to stricter guidelines regarding the accounting
for and  documentation  of cash  management or cash pooling  programs,  the FERC
proposal, if made final, would preclude public utilities,  natural gas companies
and oil pipeline companies from participating in such programs unless the parent
company  and  its  FERC-regulated  affiliate  maintain  investment-grade  credit
ratings and that the FERC-regulated  affiliate maintains  stockholders equity of
<PAGE>

at least 30 percent of total  capitalization.  Williams'  and Texas Gas' current
credit  ratings are not investment  grade.  Texas Gas  participated  in comments
filed in this  proceeding  on August  28,  2002 by the  Interstate  Natural  Gas
Association  of America.  On September  25, 2002,  the FERC convened a technical
conference  to discuss  issues  raised in the comments  filed by parties in this
proceeding.

LEGAL PROCEEDINGS

       ROYALTY CLAIMS AND PRODUCER LITIGATION

       In connection  with Texas Gas'  renegotiations  of supply  contracts with
producers  to  resolve  take-or-pay  and other  contract  claims,  Texas Gas has
entered into certain  settlements which may require the indemnification by Texas
Gas of certain claims for royalties which a producer may be required to pay as a
result  of such  settlements.  Texas  Gas has  been  made  aware of  demands  on
producers  for  additional  royalties  and may receive  other demands that could
result in claims against Texas Gas pursuant to the indemnification  provision in
its  settlements.  Indemnification  for  royalties  will depend on,  among other
things,  the specific lease  provisions  between the producer and the lessor and
the terms of the  settlement  between the producer and Texas Gas.  Texas Gas may
file to  recover  75  percent  of any such  amounts  it may be  required  to pay
pursuant to  indemnifications  for royalties  under the provisions of FERC Order
528. Texas Gas has provided reserves for the estimated settlement costs of other
royalty claims and litigation.

       OTHER LEGAL ISSUES

       In 1998, the United States  Department of Justice informed  Williams that
Jack  Grynberg,  an individual,  had filed claims in the United States  District
Court for the District of Colorado  under the False Claims Act against  Williams
and certain of its wholly owned  subsidiaries  including Texas Gas. Mr. Grynberg
has also filed  claims  against  approximately  300 other energy  companies  and
alleges that the defendants violated the False Claims Act in connection with the
measurement,  royalty valuation and purchase of hydrocarbons.  The relief sought
is an  unspecified  amount  of  royalties  allegedly  not  paid  to the  federal
government,  treble  damages,  a civil penalty,  attorneys'  fees, and costs. On
April 9, 1999,  the United States  Department of Justice  announced  that it was
declining  to intervene  in any of the  Grynberg  qui tam cases,  including  the
action filed against the Williams  entities in the United States  District Court
for the District of Colorado.  On October 21, 1999, the Panel on  Multi-District
Litigation  transferred all of the Grynberg qui tam cases, including those filed
against  Williams,  to the United  States  District  Court for the  District  of
Wyoming for pre-trial  purposes.  On October 9, 2002, the court granted a motion
to dismiss  Grynberg's royalty valuation claims.  Grynberg's  measurement claims
remain pending against Williams and the other defendants.

       On  May  2,  2000  a  flash  fire  occurred  at  Texas  Gas'  Greenville,
Mississippi compressor station injuring six contract employees and one Texas Gas
employee.  One contract employee died while in the hospital. A lawsuit was filed
against Texas Gas on behalf of the deceased  contract employee and several other
contract employees that were injured;  however,  damages were not specified.  On
October 4 and 5, 2001 a mediation  was held  involving  Texas Gas, its insurance
carriers (through its contractor Bluewater Construction Inc.  (Bluewater)),  and
Plaintiffs.  Settlement was reached with all named plaintiffs.  A final contract
employee alleging  injuries from the same accident has filed separately  against
Texas Gas.  This  plaintiff  was included in the original  litigation,  and then
withdrew. Informal settlement negotiations are continuing with this plaintiff.
<PAGE>

       On June 8, 2001, 14 Williams entities, including Texas Gas, were named as
defendants in a nationwide  class action lawsuit which has been pending  against
other defendants,  generally pipeline and gathering companies, for more than one
year.  The  plaintiffs  allege  that  the  defendants,  including  the  Williams
defendants,  have engaged in mismeasurement  techniques that distort the heating
content of natural gas, resulting in an alleged underpayment of royalties to the
class of producer  plaintiffs.  In September  2001, the  plaintiffs  voluntarily
dismissed two of the 14 Williams entities named as defendants in the lawsuit. In
November  2001,  Williams,  along with other  Coordinating  Defendants,  filed a
motion to dismiss on  non-jurisdictional  grounds.  In January 2002, most of the
Williams  defendants,  along with a group of  Coordinating  Defendants,  filed a
motion  to  dismiss  for lack of  personal  jurisdiction.  On August  19,  2002,
defendants' motion to dismiss on  non-jurisdictional  grounds was dismissed.  On
September 17, 2002 the plaintiffs filed a motion for class certification. In the
next several months,  the Williams  entities will join with other  defendants in
contesting certification of the plaintiff class.

       ENVIRONMENTAL MATTERS

       As of September 30, 2002, Texas Gas had a reserve of  approximately  $1.3
million  for  estimated  costs  associated  with  environmental  assessment  and
remediation,  including  remediation  associated  with  the  historical  use  of
polychlorinated biphenyls and hydrocarbons.  This estimate depends upon a number
of  assumptions  concerning  the scope of  remediation  that will be required at
certain locations and the cost of remedial measures to be undertaken.  Texas Gas
is continuing to conduct environmental assessments and is implementing a variety
of remedial  measures  that may result in  increases  or  decreases in the total
estimated costs.

       Texas Gas currently is either named as a potentially responsible party or
has received an  information  request  regarding  its potential  involvement  at
certain  Superfund and state waste disposal sites.  The anticipated  remediation
costs,  if any,  associated  with these sites have been  included in the reserve
discussed above.

       Texas Gas is also subject to the federal  Clean Air Act (CAA) and the CAA
Amendments  of 1990  (Amendments)  which  added  significant  provisions  to the
existing federal CAA. The Amendments require the Environmental Protection Agency
(EPA) to promulgate new regulations pertaining to mobile sources,  hazardous air
pollutants,  areas of ozone  non-attainment,  and acid rain.  Texas Gas is aware
that during 2002 the EPA may designate  additional areas as non-attainment based
on  implementation  of the  revised  ozone  standard  (8 hour  standard).  Areas
designated as non-attainment  under the revised standard may potentially  impact
Texas Gas' operations.  Emission control  modifications of compression equipment
located at facilities  required to comply with current  federal CAA  provisions,
the  Amendments,  and  State  Implementation  Plans  for  nitrogen  oxide  (NOx)
reductions  are  estimated  to cost in the range of $6 million to $14 million by
2005 and will be recorded as additions to property,  plant and  equipment as the
facilities are added. If the EPA designates  additional new non-attainment areas
which impact Texas Gas' operations, the cost of additions to property, plant and
equipment is expected to increase;  however, Texas Gas is unable at this time to
estimate  with  any  certainty  the  cost of  additions  that  may be  required.
Moreover,   regulations  pertaining  to  Hazardous  Air  Pollutants  (HAPs)  are
anticipated to be promulgated in late 2002, which may require emission  controls
in addition to the controls  mentioned above. Texas Gas cannot predict the costs
with  any  certainty  at this  time  resulting  from the  installation  of these
controls.   The  effective   compliance  date  for  the  HAPs   regulations  and
installation of associated  controls is anticipated to be during 2005;  however,
an  extension  of  this  date  may  result  due to  the  delay  associated  with
promulgating these rules.
<PAGE>

       Texas Gas considers  environmental  assessment,  remediation  costs,  and
costs associated with compliance with environmental  standards to be recoverable
through  rates,  as they are prudent  costs  incurred in the ordinary  course of
business.  The actual costs incurred will depend on the actual amount and extent
of contamination discovered,  the final cleanup standards mandated by the EPA or
other governmental authorities, and other factors.

       SUMMARY

       While no  assurances  may be given,  Texas Gas does not believe  that the
ultimate  resolution of the foregoing matters taken as a whole,  based on advice
from counsel and after  consideration  of amounts accrued,  insurance  coverage,
potential recovery from customers or other  indemnification  arrangements,  will
have a  materially  adverse  effect on Texas  Gas'  future  financial  position,
results of operations or cash flow requirements.

                       4. DEBT AND FINANCING ARRANGEMENTS

       LONG-TERM DEBT

       Williams  and  certain of its  subsidiaries,  including  Texas  Gas,  are
parties to a $700 million credit agreement,  under which Texas Gas can borrow up
to $200 million if the funds available under the credit  agreement have not been
borrowed by Williams or other subsidiaries. The credit agreement expires in July
2005.  Interest rates vary with current market conditions based on the base rate
of Citibank  N.A.,  three-month  certificates  of deposit of major United States
money market banks, federal funds rate or the London Interbank Offered Rate. The
credit agreement contains restrictions which limit, under certain circumstances,
the issuance of additional  debt,  the attachment of liens on any assets and any
change of ownership of Texas Gas. As Williams completes certain asset sales, the
$700 million  commitment from  participating  banks in the credit agreement will
ultimately  be  reduced to $400  million,  but Texas Gas will  continue  to have
borrowing  capacity up to $200 million if the funds  available  under the credit
agreement   have  not  been   borrowed  by   Williams  or  other   participating
subsidiaries. At September 30, 2002, the commitment from participating banks had
been reduced to $660 million.  At September 30, 2002,  $200 million of borrowing
capacity was  available to Texas Gas. At  September  30, 2002,  Texas Gas had no
outstanding borrowings under this agreement.

       SALE OF RECEIVABLES

       Texas Gas,  through a wholly owned  bankruptcy  remote  subsidiary,  sold
certain  trade  accounts  receivable  to a  special  purpose  entity  (SPE) in a
securitization  structure  requiring  annual  renewal.  Texas  Gas  acted as the
servicing agent for sold receivables and received a servicing fee  approximating
the fair value of such services. The sale of receivables program expired on July
25, 2002.  By the end of August 2002,  Texas Gas  completed  the  repurchase  of
approximately $10 million of trade accounts receivable previously sold.

<PAGE>



                                  5. SEVERANCE

       As part of the  effort  to  reduce  future  operating  expenses,  certain
employee positions are being eliminated through  organizational  changes.  Texas
Gas recorded $2.0 million of severance  costs  applicable to 78 employees  whose
positions have been eliminated.  Additional  severance costs are expected in the
fourth quarter of 2002 as additional  positions are eliminated  within the Texas
Gas organization.


ITEM 2.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
                  (FILED PURSUANT TO GENERAL INSTRUCTION H)


       RECENT EVENTS

       As a result  of credit  issues  facing  Williams  and the  assumption  of
payment  obligations  and  performance  on guarantees  associated  with Williams
Communications  Group,  Inc.  (WCG),  a former  affiliate of Williams,  Williams
announced plans during the first quarter of 2002 to strengthen its balance sheet
and  support  retention  of its  investment  grade  ratings.  The plan  included
reducing capital expenditures during the balance of 2002, future sales of assets
to generate  proceeds to be used to reduce  outstanding debt and the lowering of
expenses,  in part through an  enhanced-benefit  early retirement  program which
concluded during the second quarter.

       During the second quarter,  Williams  experienced  liquidity issues,  the
effect of which limited Williams Energy Marketing & Trading's (WEM&T) ability to
manage  market  risk  and  exercise  hedging   strategies  as  market  liquidity
deteriorated.  During May 2002,  major  rating  agencies  lowered  their  credit
ratings on Williams'  unsecured  long-term debt;  however,  the ratings remained
investment grade for the balance of the quarter.

       Williams  experienced a substantial net loss for the second  quarter.  In
addition,  the  Williams  board of directors  reduced the Williams  common stock
dividend  for the third  quarter from the prior level of 20 cents per share to 1
cent per  share.  The  major  rating  agencies  downgraded  Williams'  unsecured
long-term  debt  credit  ratings  to  below   investment  grade  reflecting  the
uncertainty  associated with Williams' energy trading business,  short-term cash
requirements  facing  Williams  and the  increased  level of debt  Williams  had
incurred to meet the WCG payment  obligations  and  guarantees.  Concurrent with
these  events,  Williams  was  unable to  complete  a renewal  of its  unsecured
short-term bank facility, which expired on July 24, 2002. Subsequently, Williams
did obtain two secured facilities totaling $1.3 billion and amended its existing
$700 million  credit  agreement,  which  expires July 2005,  to make it secured.
These facilities  include pledges of certain assets and contain financial ratios
and  other  covenants  that  must  be  maintained.  If  such  provisions  of the
agreements  are not  maintained,  then  amounts  outstanding  can become due and
payable immediately.  In addition, Williams is pursuing the sale of other assets
to enhance liquidity. The sales are anticipated to close during the remainder of
2002 and the first half of 2003.

        As part of the  effort  to reduce  future  operating  expenses,  certain
employee positions are being eliminated through  organizational  changes. In the
third quarter,  Texas Gas recorded $2.0 million of severance costs applicable to
78 employees whose positions have been  eliminated.  Additional  severance costs
<PAGE>

are  expected  in the  fourth  quarter  of  2002  as  additional  positions  are
eliminated within the Texas Gas organization.

       The  energy  trading  sector  has  experienced  deteriorating  conditions
because of credit and regulatory concerns,  and these have significantly reduced
WEM&T's ability to attract new business.  On August 1, 2002, Williams' announced
its  intention  to further  reduce its  commitment  and  exposure  to its energy
marketing and risk  management  business.  This  reduction  could be realized by
entering  into a joint  venture  arrangement  with a third  party or a sale of a
portion or all of the marketing and trading portfolio. WEM&T, as well as several
unaffiliated energy trading companies, are Texas Gas customers. Texas Gas cannot
predict  at  this  time to what  extent  its  business  may be  impacted  by the
deteriorating  conditions in the energy trading sector, however,  generally such
companies have continued to perform their contractual commitments to Texas Gas.


                              RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO
NINE MONTHS ENDED SEPTEMBER 30, 2001

       Operating  income  was $19.3  million  higher for the nine  months  ended
September  30, 2002,  than for the nine months  ended  September  30, 2001.  The
increase in operating  income was due primarily to the  settlement of regulatory
issues related to Texas Gas' rate case.

       Operating  revenues  increased $13.4 million primarily  attributable to a
$10.5 million  recognition  of revenues ($1.5 million is applicable to the first
six months of 2002)  associated  with the  settlement  of the general  rate case
(Docket No.  RP00-260) in the third quarter of 2002. Total deliveries were 489.8
Tbtu and 517.7  Tbtu for the nine  months  ended  September  30,  2002 and 2001,
respectively.  The decrease in throughput was partially offset by an increase in
transportation volumes to processing plants. In 2001,  transportation volumes to
processing plants decreased dramatically due to the spike in natural gas prices.
Generally,  transportation  of  this  gas is for a  relatively  short  distance;
therefore, the revenue associated with this transportation is minimal.

       Operating   costs  and  expenses   decreased   $5.9   million   primarily
attributable  to $7.0 million in lower  depreciation  expense due primarily from
lower  depreciation rates ($1.9 million is applicable to the first six months of
2002),  retroactive  to November 1, 2000,  approved in Texas Gas'  general  rate
case. Operation and maintenance costs decreased $1.3 million due primarily to an
insurance  settlement received in 2002 and the timing of the occurrence of these
expenses,  partially  offset by $1.8 million of severance  related  costs due to
employee  reductions  in field  operations.  General  and  administrative  costs
increased $1.0 million due primarily to higher  aviation  related costs and $0.2
million of severance  related  costs due to office  employee  reductions.  Taxes
other than income  increased $1.2 million due primarily to favorable  resolution
of property tax issues in 2001.

       Net income increased $13.4 million primarily due to the reasons discussed
above, $1.8 million for the gain on the sale of equipment,  higher miscellaneous
income,  and lower  interest  expense  resulting from the settlement of the rate
case.  Higher net income was partially offset by lower interest income resulting
from lower advances to WGP due to the payout of refunds to customers.
<PAGE>

                         CAPITAL RESOURCES AND LIQUIDITY

       METHOD OF FINANCING

       Texas Gas funds its capital  requirements  with cash flows from operating
activities by accessing capital markets, by repayments of funds advanced to WGP,
by  borrowings  under a credit  agreement  (discussed  below) and, if  required,
advances from WGP. Historically,  Texas Gas also funded its capital requirements
through  a sale  of  receivables  program.  In July  2002,  Texas  Gas'  sale of
receivables program expired and was not renewed.

       Texas  Gas has an  effective  registration  statement  on file  with  the
Securities and Exchange Commission. At September 30, 2002, $100 million of shelf
availability  remains under this  registration  statement,  which may be used to
issue debt securities.  Interest rates and market conditions will affect amounts
borrowed,  if any,  under this  arrangement.  With the  downgrade  in Texas Gas'
credit ratings  (discussed  below),  interest rates on future financings will be
higher,  but  Texas Gas  believes  any  additional  financing  arrangements,  if
required,   can  be  obtained  from  the  capital  markets  on  terms  that  are
commensurate with its current credit ratings.

       Williams  and  certain of its  subsidiaries,  including  Texas  Gas,  are
parties to a $700 million credit agreement,  under which Texas Gas can borrow up
to $200 million if the funds available under the credit  agreement have not been
borrowed by Williams or other subsidiaries. The credit agreement expires in July
2005.  Interest rates vary with current market conditions based on the base rate
of Citibank  N.A.,  three-month  certificates  of deposit of major United States
money market banks, federal funds rate or the London Interbank Offered Rate. The
credit agreement contains restrictions which limit, under certain circumstances,
the issuance of additional  debt,  the attachment of liens on any assets and any
change of ownership of Texas Gas. As Williams completes certain asset sales, the
$700 million  commitment from  participating  banks in the credit agreement will
ultimately  be  reduced to $400  million,  but Texas Gas will  continue  to have
borrowing  capacity up to $200 million if the funds  available  under the credit
agreement   have  not  been   borrowed  by   Williams  or  other   participating
subsidiaries. At September 30, 2002, the commitment from participating banks had
been reduced to $660 million.  At September 30, 2002,  $200 million of borrowing
capacity was  available to Texas Gas. At  September  30, 2002,  Texas Gas had no
outstanding borrowings under this agreement.

       As a participant  in Williams'  cash  management  program,  Texas Gas has
advances  to and/or  from  Williams  through  Texas Gas'  parent  company,  WGP.
Advances are  represented  by demand notes.  The interest  rate on  intercompany
demand notes is the London Interbank  Offered Rate on the first day of the month
plus an  applicable  margin based on the current  Standard and Poor's  Rating of
Texas Gas. At  September  30,  2002,  the  advances due Texas Gas by WGP totaled
$22.3  million.  Because of recent asset sales,  anticipated  asset sales in the
future and  recently  negotiated  secured  borrowing  facilities,  Williams  has
indicated  that it currently  believes  that it continues to have the  financial
resources and liquidity to repay advances to Texas Gas.

       On August 1, 2002, the FERC issued a NOPR that proposes  restrictions  on
the type of cash management  program employed by Williams and its  subsidiaries,
including Texas Gas. In addition to stricter guidelines regarding the accounting
for and  documentation  of cash  management or cash pooling  programs,  the FERC
proposal, if made final, would preclude public utilities,  natural gas companies
and oil pipeline companies from participating in such programs unless the parent

<PAGE>

company  and  its  FERC-regulated  affiliate  maintain  investment-grade  credit
ratings and that the FERC-regulated  affiliate maintains  stockholders equity of
at least 30 percent of total  capitalization.  Williams'  and Texas Gas' current
credit  ratings are not investment  grade.  Texas Gas  participated  in comments
filed in this  proceeding  on August  28,  2002 by the  Interstate  Natural  Gas
Association  of America.  On September  25, 2002,  the FERC convened a technical
conference  to discuss  issues  raised in the comments  filed by parties in this
proceeding.

       Texas Gas,  through a wholly owned  bankruptcy  remote  subsidiary,  sold
certain  trade  accounts  receivable  to a  special  purpose  entity  (SPE) in a
securitization  structure  requiring  annual  renewal.  Texas  Gas  acted as the
servicing agent for sold receivables and received a servicing fee  approximating
the fair value of such services. The sale of receivables program expired on July
25, 2002.  By the end of August 2002,  Texas Gas  completed  the  repurchase  of
approximately $10 million of trade accounts receivable previously sold.


       CREDIT RATINGS

       Texas Gas has no  guarantees of  off-balance  sheet debt to third parties
and maintains no debt obligations that contain provisions requiring  accelerated
payment of the related  obligations in the event of specified levels of declines
in Williams' or Texas Gas' credit ratings given by Moody's  Investor's  Service,
Standard & Poor's and Fitch Ratings (rating agencies).



       In the second  quarter and July 2002, the rating  agencies  reduced Texas
Gas' credit ratings on its senior unsecured long-term debt, as follows:

       Moody's Investor's Services...............................Baa1 to Ba2
       Standard & Poor's..........................................BBB+ to B+
       Fitch Ratings.............................................BBB+ to BB-

       The rating  agencies  have  reduced  Texas  Gas'  credit  ratings  due to
concerns about the  sufficiency of Williams'  operating cash flow in relation to
its debt as well as the  adequacy of  Williams'  liquidity.  The ratings  remain
under review pending the execution of Williams' plan to strengthen its financial
position.

       CAPITAL EXPENDITURES

       As  discussed  above,  Williams has  announced  plans to  strengthen  its
balance  sheet,  which includes  reductions in Williams' 2002 estimated  capital
spending  program.  As a  Williams  subsidiary,  Texas Gas will  participate  in
Williams'  plan to reduce  capital  spending,  primarily  by  managing  its 2002
capital spending  program at a lower level than  anticipated  prior to Williams'
announcement.

       Texas Gas'  capital  expenditures  for the first nine  months of 2002 and
2001 were $36.9 million and $44.1 million,  respectively.  Capital  expenditures
for 2002 are expected to approximate $42 million.

       Texas Gas' debt as a percentage of total  capitalization at September 30,
2002 and December 31, 2001 was 25.9% and 26.7%, respectively.
<PAGE>

       GENERAL RATE ISSUES

       As discussed in Note 3 of the Notes to Condensed  Consolidated  Financial
Statements,  on April 28, 2000,  Texas Gas filed a general rate case (Docket No.
RP00-260) which became effective  November 1, 2000,  subject to refund. On March
4, 2002,  the FERC issued an order  approving  the  settlement  and severing the
Indicated  Shippers from the settlement  provisions.  On June 17, 2002, the FERC
issued an order  denying the  Indicated  shipper's  request for rehearing of the
March 4, 2002 order.  The settlement  became  effective 31 days after that order
when no party filed any further  requests for rehearing.  Thus, the settlement's
prospective   rates  went  into   effect  on  August  1,  2002  and  refunds  of
approximately  $37.5  million  were made on September  16,  2002.  Texas Gas had
provided  an  adequate  reserve  for  amounts,  including  interest,  which were
refunded to customers.

CONCLUSION

        Although no assurances can be given,  Texas Gas currently  believes that
the  aggregate  of cash  flows from  operating  activities,  supplemented,  when
necessary,  by  repayments  of  funds  advanced  to  WGP,  advances  or  capital
contributions  from  Williams and  borrowings  under the Credit  Agreement  will
provide Texas Gas with  sufficient  liquidity to meet its capital  requirements.
When  necessary,  Texas Gas also expects to access public and private markets on
terms  commensurate  with its  current  credit  ratings to finance  its  capital
requirements.

ITEM  4.  CONTROLS AND PROCEDURES

       An evaluation of the  effectiveness  of the design and operation of Texas
Gas' disclosure controls and procedures (as defined in Rule 13a-14 and 15d-14 of
the  Securities  Exchange  Act) was  performed  within  the 90 days prior to the
filing date of this report.  This evaluation was performed under the supervision
and with the participation of Texas Gas' management,  including Texas Gas' Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, Texas
Gas' Chief Executive  Officer and Chief Financial  Officer  concluded that these
disclosure controls and procedures are effective.

       There have been no significant changes in Texas Gas' internal controls or
other  factors  that could  significantly  affect  internal  controls  since the
certifying officers' most recent evaluation of those controls.



<PAGE>



                   PART II - OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS.

             See  discussion  in Note 3 of the Notes to  Condensed  Consolidated
Financial Statements included herein.

ITEM 6.      EXHIBITS AND REPORTS ON FORM 8-K.

             (a)   Exhibits.

                   The  following  instruments  are included as exhibits to this
                   report. Those exhibits below incorporated by reference herein
                   are  indicated  as such by the  information  supplied  in the
                   parenthetical  thereafter.  If no parenthetical appears after
                   an  exhibit,  copies of the  instrument  have  been  included
                   herewith.

                  (10)  Material  contracts
                        - 1   First  Amended and Restated  Credit Agreement
                              dated as of  October  31,  2002  among  The
                              Williams Companies,  Inc.,  Northwest Pipeline
                              Corporation, Transcontinental  Gas Pipe  Line
                              Corporation  and Texas Gas Transmission
                              Corporation,  as  Borrowers,  the Banks  named
                              therein,   JPMorgan  Chase  Bank  and
                              Commerzbank  AG,  as Co-Syndication  Agents,
                              Credit Lyonnais New York Branch, as Documentation
                              Agent,  Citicorp  USA,  Inc.,  as Agent,  and
                              Salomon  Smith  Barney Inc.,  as Arranger  (filed
                              as Exhibit 10.2 to The  Williams  Companies,  Inc.
                              Form  10-Q  for the quarter  ended  September  30,
                              2002  Commission  File Number 1-4174).

                   (99)   Additional exhibits
                          -   1     Certification  pursuant  to 18 U.S.C.
                                    Section  1350,  as adopted  pursuant  to
                                    Section  906 of The Sarbanes-Oxley Act of
                                    2002 by J. Douglas Whisenant,  President
                                    and Chief Executive Officer of Texas
                                    Gas Transmission Corporation

                          -   2     Certification  pursuant  to 18 U.S.C
                                    Section  1350,  as adopted  pursuant  to
                                    Section  906 of The Sarbanes-Oxley  Act of
                                    2002 by Richard  Rodekohr,  Vice  President
                                    and Chief  Financial  Officer of Texas Gas
                                    Transmission Corporation

           (b) Reports on Form 8-K.

               None



<PAGE>



                                       20
                                    SIGNATURE


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.




                 Texas Gas Transmission Corporation (Registrant)




Dated:  November 14, 2002                     BY /S/ JEFFREY P. HEINRICHS
                                             ----------------------------------

                                              Jeffrey P. Heinrichs
                                              Controller
                                              (Principal Accounting Officer)











<PAGE>



                                 Certifications
I, J. Douglas Whisenant, President and Chief Executive Officer of Texas Gas
Transmission Corporation ("registrant") certify that:
     1.  I have reviewed this quarterly report on Form 10-Q of the registrant;

     2.   Based  on my  knowledge,  this  quarterly  report  does  not
          contain any untrue  statement of a material  fact or omit to
          state a material fact necessary to make the statements made,
          in light of the  circumstances  under which such  statements
          were made, not misleading with respect to the period covered
          by this quarterly report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this quarterly report;

     4.  The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)   designed such disclosure  controls and procedures to ensure
              that material information relating to the registrant,
              including its  consolidated  subsidiaries,  is made known to us by
              others within those  entities,  particularly  during the period in
              which this quarterly report is being prepared;

         b)   evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls and  procedures  as of a date within 90 days prior to the
              filing date of this quarterly report (the "Evaluation Date"); and

         c)   presented  in this  quarterly  report  our  conclusions  about the
              effectiveness  of the disclosure  controls and procedures based on
              our evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent function):

         a) all significant deficiencies in the design or  operation  of
            internal  controls  which could  adversely affect the
            registrant's  ability to  record,  process,  summarize  and report
            financial data and have identified for the  registrant's  auditors
            any material weaknesses in internal controls; and

         b) any fraud,  whether or not material,  that involves  management or
            other  employees who have a significant  role in the  registrant's
            internal controls; and

       6.The registrant's other certifying officers and I have indicated in this
         quarterly  report  whether  or not there  were  significant  changes in
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to the date of our most recent evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Dated:  November 14, 2002          BY /S/ J. DOUGLAS WHISENANT
                                   -------------------------------------------
                                   J. Douglas Whisenant
                                   President and    Chief Executive Officer


<PAGE>



                                 Certifications
 I,  Richard  Rodekohr,  Vice President and Chief Financial Officer of Texas Gas
     Transmission  Corporation  ("registrant")  certify that:

     1. I have reviewed this  quarterly  report  on Form  10-Q of the
        registrant;

     2. Based on my knowledge, this quarterly report does not contain any untrue
        statement of a material fact or omit to state a material fact  necessary
        to make the  statements  made, in light of the
         circumstances  under which such  statements  were made,  not misleading
         with respect to the period covered by this quarterly report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included in this quarterly  report,  fairly present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this quarterly report;

     4.  The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         we have:

         a)   designed such disclosure  controls and procedures to ensure
              that material information relating to the registrant,
              including its  consolidated  subsidiaries,  is made known to us by
              others within those  entities,  particularly  during the period in
              which this quarterly report is being prepared;
         b)   evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls and  procedures  as of a date within 90 days prior to the
              filing date of this quarterly report (the "Evaluation Date"); and
         c)   presented  in this  quarterly  report  our  conclusions  about the
              effectiveness  of the disclosure  controls and procedures based on
              our evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent function):

         a) all significant deficiencies in the design or  operation  of
            internal  controls  which could  adversely  affect the
            registrant's  ability to  record,  process,  summarize  and report
            financial data and have identified for the  registrant's  auditors
            any material weaknesses in internal controls; and
         b) any fraud,  whether or not material,  that involves  management or
            other  employees who have a significant  role in the  registrant's
            internal controls; and

      6. The registrant's other certifying officers and I have indicated in this
         quarterly  report  whether  or not there  were  significant  changes in
         internal controls or in other factors that could  significantly  affect
         internal controls subsequent to the date of our most recent evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.


Dated:  November 14, 2002            BY /S/ RICHARD RODEKOHR
                                     -------------------------------------------
                                     Richard Rodekohr
                                     Vice President and Chief Financial Officer